You must inform both your insurance provider and the leasing company if you total a leased car in an auto accident. You are responsible for paying the balance of the lease. Your auto insurance will only cover the vehicle’s fair market value. The remainder will be your responsibility. What’s left can be covered if you have gap insurance.
Learn more from a vehicle accident legal firm about the repercussions of having your leased car declared a total loss. We are here to help you understand the legal ramifications of an automobile accident involving a rented vehicle.
What Does It Mean to Lease a Car?
A leased car is one that you use but don’t actually own. You agree to make a small monthly payment to the leasing firm in exchange for using one of their vehicles. Car leasing is similar to car rental.
If your leased car is totaled in an accident, the lease becomes more complicated. It implies that the leasing firm will be a new interested party in the dispute. Leasing firms safeguard their interests by mandating that you carry additional auto insurance in order to lease a car. Many demand accident, comprehensive, and maybe even gap insurance.
Who Decides Whether an Automobile Is a Total Loss?
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The insurance provider decides if the car is a total loss and what happens next. If the expenses of repairs are too expensive to be justified, insurance companies declare a vehicle to be totaled, even if it is leased. Typically, auto insurance companies determine that an automobile is totaled if the estimated cost of repairs exceeds 65 percent of the car’s worth.
In the Event of a Leased Vehicle Accident, Who Is Financially Responsible?
The leasing firm will ask for the remaining lease payments if an auto accident results in the entire loss of your leased vehicle. Your auto insurance’s liability coverage will take care of this up to the policy limits.
Your insurance, however, will only pay out for the car’s fair market value. Even if this falls within the parameters of your insurance, it can still be less than the balance of the lease. Insurance companies can use unfair practices, so if you sense that you are being mistreated, seek legal counsel for advice on how insurance evaluates what to pay if you total a car that’s leased.
How Can I Protect Myself if My Leased Car Gets Totaled?
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Gap insurance is a supplemental insurance plan for vehicles that have been leased or that are still financed. No driver in Arizona is obligated to carry gap insurance, but when you purchase a new car, certain auto loan lenders mandate gap insurance in the terms of your lease. Gap insurance helps cover the remaining balance in the event that your leased car gets totaled.
How Can I Purchase Gap Insurance?
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Gap insurance can be purchased either at the dealership or through an insurance agent. The gap insurance will be incorporated into your loan if you decide to buy it from the dealership where you buy your car. There can be restrictions when it comes to insurance coverage. If you need clarification, a car accident lawyer can explain the terms of your lease.
What Steps Should I Take if I Total My Leased Car?
Your initial actions should be the same whether you are driving a leased car or not when you are in a car accident:
- Remain at the accident scene. If you can, relocate your car somewhere safe and check to see if anyone requires emergency medical care by dialing 911.
- Avoid discussing who caused the accident and avoid assuming responsibility.
- Collect the other driver’s contact information, insurance information, and registration information, and if you can, snap pictures of the accident scene.
- Obtain the names and phone numbers of any witnesses to the collision, and
seek out medical help.
Following the completion of all of these stages, it’s always a good idea to contact a personal injury attorney first. Afterward, you must file an insurance claim, notify your auto insurance company of the collision, and inform your leasing company about the collision. Your attorney can get in touch with your lease and insurance companies on your behalf.
Your leasing company can advise you on where to take your vehicle for maintenance because it is the one who actually owns it. You and your auto accident attorney can contest the company’s body shop’s or dealership’s evaluation if it doesn’t seem accurate.
Can I Negotiate without a Lawyer After an Accident, or Is Legal Representation Required?
There is no obligation to retain a car accident lawyer after totaling your leased vehicle. Hiring an attorney is a benefit because insurance companies have the incentive to pay you less than they should. To get a better deal on your leased car, they may inflate its monetary value.
Your car accident lawyer will remain dedicated to your interests, fighting any unfair determinations.
Can I File a Personal Injury Claim to Pay for My Car Lease?
You could choose to pursue a personal injury lawsuit against the entity that caused the collision if you were not at fault for the collision and it totaled your leased car. The amount of your car accident settlement may not cover your lease, but it will provide financial relief for:
- Medical expenses
- Lost earnings and income
- Diminished earning potential due to any injuries experienced in the collision
- Damage to property
- Pain and suffering
- Emotional distress
A car accident lawyer can go over the details of your lease agreement and submit a personal injury claim to get you the compensation you deserve for your damage and losses.